20 NCAC 03 .0502AUDIT CONTRACT
(a) The Secretary may promulgate a standard audit contract designed to include the specific requirements in Subdivision (c) of this Rule.The Secretary may revise the standard audit contract from time to time as circumstances require provided that the contract continues to include the requirements of this Section.The requirements may be included in the contract either specifically or by reference to this Section.
(b) Governmental units and their independent auditors may submit contracts on their own forms provided that the form includes all requirements, either specifically or by reference, in Subdivision (c) of this Rule.
(c) The following requirements and conditions shall be included in all contracts for governmental units:
(1)The scope of the audit shall include all funds and ledgers of the governmental unit, and the requirement that the audit shall be conducted in accordance with generally accepted auditing standards and shall include such tests of the accounting records and such other procedures (including direct confirmation of tax, utility and other receivables) as are considered by the auditor to be necessary in the circumstances. Exceptions to the scope of the audit may be made only by specific approval of the Secretary or a deputy secretary and only for reasons that are fully explained as to the circumstances of the particular situation.
(2)The audit shall include a review of the internal control system of the governmental unit as provided by generally accepted auditing standards.The auditor shall forward a management letter to the unit, detailing his findings and his recommendations for improvement.The auditor shall forward a copy of the management letter to the Commission.
(3)The auditor shall, after the completion of his examination, submit to the governing body a report of the audit with as many copies as requested in the contract.The report shall include all funds and ledgers included in the scope of the audit, and an expression of opinion on the financial statements included therein.If the expression of opinion is in any way qualified or if an opinion is disclaimed or not included for any reason, sufficient reasons therefor shall be included in the report of audit.Copies of the audit report and any special reports issued as a result of the audit engagement shall be transmitted forthwith to the Commission.
(4)The fee for the audit engagement shall be stated.The fee may be stated as a fixed dollar amount or as a rate per hour or day, either with or without a maximum.
(5)The auditor shall promptly notify the governing body and the commission, if circumstances disclosed by the audit call for a more detailed investigation by the auditor than necessary under ordinary conditions.
(6)No agreement(s) relating to the audit engagement but not attached to and referenced in the audit contract shall be enforceable by any party to said agreement(s).
(d) Form LGC205 shall be provided for the convenience of those auditors and units who wish to use the form.
History Note:Authority G.S. 1593(f); 15934;
Eff. February 1, 1976;
Readopted Eff. September 23, 1977;
Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. January 9, 2018.